A federal grand jury has indicted 15 people for fraud targeting more than $90 million in taxpayer dollars across seven Minnesota Medicaid programs, a scheme that billed for care allegedly provided to patients who were hospitalized, and in at least one case, dead.
The U.S. Department of Justice announced the charges Thursday, calling it the largest autism fraud bust in American history. One suspect jumped from a fourth-story balcony to evade arrest. Several defendants operated out of Philadelphia, flying to Minneapolis to recruit beneficiaries. And a former state employee testified that Minnesota's Department of Human Services was paralyzed by a fear of being called racist if it investigated fraud complaints.
The indictment lays bare what happens when pandemic-era spending explodes without oversight, and when the people responsible for catching fraud look the other way.
Assistant Attorney General Colin McDonald announced the indictment at a Thursday press conference, detailing fraud across seven Medicaid programs. The targeted programs included Minnesota's Housing Stabilization Services, the state's autism program, Integrated Community Supports, Individualized Home Supports, and the Child Care Assistance Program.
The numbers tell the story of a system that lost control. Minnesota's Housing Stabilization program started with a budget of $2.5 million. By 2024, that figure had ballooned to $104 million, nearly fifty times the original amount. The state ultimately terminated the program last year.
Health and Human Services Secretary Robert F. Kennedy Jr. pointed to another program with a similar trajectory. He explained the cost of Minnesota's early intervention development program in 2020:
"This was the cost of the early intervention development program in 2020. It was $38.1 million. This is what we expected to be paying every year. Instead, this year it hit $442 million.... [That's] the magnitude of the fraud and the damage that we're talking about today."
From $38 million to $442 million. That is not a rounding error. That is not organic growth. That is a program hemorrhaging money with no one watching the books.
The individual cases in the indictment read like a catalog of brazen theft. Consider Muhammad Omar, the suspect who leaped from a fourth-story balcony when authorities came to arrest him. Court records show Omar faces one count of conspiracy to commit health care fraud and four counts of health care fraud.
Prosecutors say Omar worked with Ibrahim Bashir Abdi to create North Home Health Care, and Omar separately opened South Home Health Care. Both companies were registered with Minnesota's Housing Stabilization program. The men allegedly falsified and inflated service hours provided by North Home. Some of the patients they claimed to serve were hospitalized at the time. Others were dead.
Omar and Abdi pocketed $3.2 million on those false claims, prosecutors say. Omar collected an additional $480,000 through South Home. By Thursday afternoon, FOX 9 reported that Omar had been arrested and was in custody.
He was not the only defendant billing for phantom care. Ahmed Othman Kadar faces health care fraud and money laundering charges after his company allegedly defrauded Medicaid of roughly $1.4 million by billing for Integrated Community Supports services that were never provided, including care for a patient who was ultimately found dead.
The largest single alleged scheme involved Minnesota's autism program. Shamso Ahmed Hassan and Hanaan Mursal Yusuf are charged with conspiracy to commit health care fraud, health care fraud, and money laundering. Prosecutors say they billed Medicaid $46.6 million, receiving $21.1 million, for services that were either unnecessary or never provided. The pair allegedly paid kickbacks for children enrolled in the program.
Kennedy did not mince words about what the indictment represented:
"This was not a paperwork error. It was not a technical violation. This was organized theft that exploited the most vulnerable children in America, deceived families, stole taxpayer dollars meant to help children with autism access legitimate care and support."
Several defendants operated not from Minnesota but from Pennsylvania, raising questions about how out-of-state operators could register companies in Minnesota and drain its Medicaid programs with so little scrutiny.
Deborah Hodges, based in Pennsylvania, is charged with conspiracy to commit health care fraud and health care fraud for allegedly orchestrating a scheme that fraudulently billed Medicaid approximately $5.3 million for Housing Stabilization Services that were inflated, ineligible, or never provided. Prosecutors say she worked with at least two unnamed co-conspirators.
Cynthia Allen, who lived in Philadelphia, registered a company in Minnesota and assisted in operating another company owned by an unnamed co-conspirator. Between the two companies, Allen and her associate received $3.4 million in false claims.
Candice Langley, also based out of Philadelphia, ran a company with unnamed co-conspirators. Prosecutors say the group routinely flew from Philadelphia to Minneapolis to recruit beneficiaries. The scheme billed Medicaid $3.5 million in false claims.
How does a state allow people living a thousand miles away to register companies, bill its Medicaid programs for millions, and never trigger a red flag?
Some of the alleged fraud was so clumsy it should have been caught immediately. Sharmaine Meadows ran a company called Cradle and allegedly directed workers to report identical quantities of hours per Medicaid recipient per week, up to the maximum allowed. Prosecutors say Cradle claimed to provide services for recipients who were hospitalized and could never have received those services, and for dates and times that, when accounted for, were "mathematically impossible."
Charles Wayne Healey and Katherin Suzan Larsen-Guthmiller face charges for allegedly defrauding the Individualized Home Supports program. They are accused of billing Medicaid for $22.7 million in fraudulent claims.
Mustafa Dayib and Abdulbasit Ibrahim allegedly submitted false claims to bilk $975,000 from the Housing Stabilization program. Jillaine Mertens is accused of inflating hours and making false claims about staff for her three Minnesota day cares.
And Fahima Egeh Mahamud faces a wire fraud charge for allegedly submitting false paperwork to Minnesota's Child Care Assistance Program, claiming she collected co-payments she never actually received. Mahamud was also charged earlier this year in the separate Feeding Our Future fraud scheme. Her day care, Future Leaders Learning Center, was featured in conservative content creator Nick Shirley's video exposing fraud at Minnesota day cares. Shirley attended Thursday's press conference.
Centers for Medicare and Medicaid Services Administrator Dr. Oz pointed to testimony from Faye Bernstein, a former Minnesota DHS employee, who said there was a fear of being accused of racism if the department took action on fraud complaints. Bernstein testified Wednesday at a Senate hearing on Minnesota fraud.
Dr. Oz described a system that had spiraled beyond recovery:
"It got so out of hand, that there was panic setting in. It was at that point that we re-engaged the process and realized there were programs that had been created here with massive spending that had increased so rapidly that there's no way to save the program."
That testimony adds a dimension the raw dollar figures alone cannot capture. It suggests the fraud was not simply a failure of systems or auditing. It was a failure of institutional courage. Employees who saw the problem were afraid to act, not because they lacked evidence, but because they feared professional retaliation and accusations of bigotry.
When a government agency would rather lose $100 million than risk a bad headline, taxpayers are the ones left holding the bill.
Federal officials announced they would expand the DOJ's Health Care Fraud Section by adding 15 new trial attorneys. They also said they would create a new task force in Minneapolis specifically to combat Medicaid fraud.
McDonald framed the expansion in terms of return on investment:
"We are adding strike force prosecutors to our Midwest health care strike force team. That will be to put additional prosecutors on the ground here in Minnesota in a dedicated fashion, to work for the American people."
He added that the work of health care strike force prosecutors returns $106 for every $1 spent, a 106-to-1 return.
If that ratio holds, the question is obvious: why wasn't this done years ago, when Minnesota's program budgets were multiplying by factors of forty and fifty?
This indictment does not exist in isolation. Minnesota has already been rocked by the Feeding Our Future scandal, one of the largest pandemic fraud cases in the country. Now a second wave of charges hits many of the same program areas and, in at least one case, the same defendant.
The pattern is consistent: pandemic-era spending surges, minimal oversight, out-of-state operators exploiting open enrollment systems, and a state bureaucracy that either could not or would not police its own programs. The money was supposed to help children with autism, stabilize housing for vulnerable residents, and support home care. Instead, prosecutors say, millions went to people who billed for services never rendered, including services for the dead.
Fifteen indictments and a new task force are a start. But the real question is whether anyone inside Minnesota state government will be held accountable for building programs so poorly designed that they practically invited the theft. Prosecutors can chase the fraudsters. Someone still needs to answer for the system that made it all so easy.